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EU puts an end date to capacity payments for coal, opening a door for a European-wide phase out of coal

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Category: Press Releases

Published: 19 December 2018

Today the European Parliament, Commission and Council have taken a step in the right direction by agreeing to end coal subsidies by 2025, paving the way for a European-wide coal phase out. However the biggest polluters still got to buy some time despite the urgency of climate change. With only twelve years left to act to keep temperature rise below 1.5°C and thus avoid catastrophic impacts of climate change as highlighted in the latest IPCC report, every cent spent on coal will be costly for the climate as well as for European taxpayers.

Capacity mechanisms, which are supposedly intended to ensure supply in case extra power is needed, are often used as backdoor subsidies for the most uneconomic power plants, which are also the least efficient and most polluting. Capacity mechanisms have become the largest single source of subsidies to power plants, adding almost €58 billion to energy bills of EU citizens. Coal power plants receive their vast majority. In order to end subsidies to the most polluting plants, an eligibility criterion was introduced to exclude plants that emit more than 550 grams of CO2 per kWh from receiving capacity mechanisms support. The enforcement of the 550 criterion will effectively eliminate coal plants from the support scheme.

However, EU legislators have decided to wait for 2025 before applying the new CO2 limit on polluting power plants, making EU citizens continue to foot the bill until then for coal plants at the expense of worsening climate change. Also, EU legislators included a loophole that will allow plants with already concluded capacity contracts to escape the new rules and extended it to any contracts to be signed until the end of 2019. As a consequence some coal plants could still receive public subsidies until the late 2030s. This includes 4GW of polish coal plants that are currently under construction, but could also apply to polluting plants from other Member States which are currently negotiating capacity mechanisms with the European Commission and could still sign the contracts before the end of next year.

Wendel Trio, Director of Climate Action Network (CAN) Europe said:“While putting an end date on coal subsidies is a good step towards the clean energy transition, it falls short to address the urgency of climate action needed. But the noose is getting tighter as coal is clearly on its way out. There is now even more pressure on Member States to accelerate the clean energy transition and implement ambitious coal phase out plans by 2030 latest.

EU countries must double their efforts to end subsidies to coal and to all other fossil fuels as soon as possible. While the European Commission must more carefully scrutinise capacity mechanisms in order to ensure that they comply with the new rules, the EU as a whole must make this a priority if it is serious about becoming climate neutral by the middle of this century.”

Climate Action Network (CAN) Europe is Europe's leading NGO coalition fighting dangerous climate change. With over 150 member organisations from 35 European countries, representing over 1.700 NGOs and more than 40 million citizens, CAN Europe promotes sustainable climate, energy and development policies throughout Europe.